11 Feb 2019

Difference between Managed Services and Outsourcing

In the 20 or so years since the ‘outsourcing’ industry really hit its stride, the term has become an umbrella description for anything that is farmed-out to be managed externally to an organisation.

However, in that time, the IT and wider technology industry has evolved to include a range of more sophisticated services where shared responsibility, deeper understanding of the business, direct consultation, and transparency are the key value propositions.

Chief among them is what we now understand as ‘managed services’.

It might sound like outsourcing, but the reality is that Managed Service Providers (MSPs) perform a function that is quite distinct, and depending on who you talk to, superior to outsourcing in many important ways.

For starters, ‘outsourcing’ is typically associated with larger organisations: think about call centres and help desk teams running out of Asia, or big HR/payroll functions being outsourced by government and other large organisations.

Such contracts are often expensive, largely because they involve ceding complete responsibility to the outsourcing provider – set and forget.

This is great if that’s what an organisation wants, however with managed services, it’s often the case that a company wants to handover most of the responsibility for one or more functions, but retain some control and visibility of the way things are operating all at the same time.

Managed Service Providers are business partners

Today, organisations big and small are increasingly looking for a better mix of in-house and external control, especially when it comes to critical business functions and applications.

As communications become faster and business cycles shorten, it’s important to have a Managed Services Provider that understands how your entire business operates; and is consultative, agile, and responsive to your changing needs.

Just as every organisation is different, everyone has different expectations and reasons for engaging a Managed Services Provider.

Here we’ve created the top 5 that should apply to any organisation in any industry.

Top 5 reasons managed services is a better choice than outsourcing:

  • Fully accountable to you: Changes to the technology mix or responses to things like cyber-attacks, natural disasters or other emergencies are made transparently by Managed Services Providers, in direct consultation with you at every step.
  • Strategic and multi-functional: Managed Services Providers typically have different divisions with different functions and are able to take a more holistic approach to business transformation for their clients.
  • In the trenches: Managed Services Providers work hand-in-hand with your teams, up-skilling your human capital while taking your lead – some will even work on-site within your organisation long-term, embracing your culture and identifying trends or common issues to help prevent them from occurring again.
  • Real reporting: With Managed Services Providers, you receive regular updates on how your organisation is performing across all functions. This is in contrast to outsourcers which only have visibility into specific functions.
  • Long-term vision: Because Managed Services Providers take a broader vision of their clients’ operations and are much better placed to look further ahead, helping clients chart a course for development in the short, medium, and long-term across all of their operations. Outsourcers will only focus on the single function and agreed approach.

 

The ‘Outsourcing’ industry really started to take off a little over 20 years ago as governments and other large organisations sought to cut their staff and IT costs.

Since then, there have been mixed reports spanning the full spectrum of success and pain, with the main reasons for failure often identified as high costs or a lack of communication between provider and client.

With managed services, both parties have the opportunity to find the right balance according the specific needs and challenges facing the business, set a pathway for them to evolve over time, and develop a day-to-day working relationship that leaves little-to-no scope for miscommunication.

Top